The study is concerned with the economic behavior of nursing homes. Particular emphasis is placed on the role of ownership, or property rights, and on the method of reimbursement used by State Medicaid programs. The study will focus on a number of important policy variables which include: (a) level of costs, (b) technical efficiency, (c) input efficiency, (d) service intensity, (e) patient mix, and (f) wage scales. A series of theoretical models of nursing home behavior will be developed. Their major role will be to underly empirical analysis of relationships between ownership and payment method, on the one hand, and the six policy variables mentioned above on the other. The data base is the 1973-74 National Nursing Home Survey conducted by the National Center for Health Statistics. The survey includes data by nursing home, by patient, and by nursing home employee. Cost functions, production functions, and reduced form equations for service intensity, patient mix, and wage scales will be estimated. The unit of observation will vary by type of equation, according to data requirements and estimation considerations.